Health care reform sending costs through roof

ALEXANDRIA, Va. — There may never have been a law more misnamed than the Affordable Care Act.

President Obama’s health overhaul law already is driving up health insurance costs for businesses and consumers and will inflict even higher costs on American taxpayers in the years ahead.

Obama repeatedly promised the American people he would cut a typical family’s premium $2,500 a year before the end of his first term. But costs are rising even faster than before the law was enacted in March 2010.

A Kaiser Family Foundation survey found that premiums for a family policy topped $15,000 a year in 2011, increasing an average of $1,300 in the last year, three times faster than the year before.

The $500 billion in new taxes in the law will further fuel premiums increases. A number of factors contribute to rising health costs, but the mandates, taxes and regulations in the health law are accelerating the trend.

The premium increases reflect the law’s early provisions, such as “free” preventive care and adding “children” up to age 26 to their parents’ policies. Consumers may like these features, but they come at a cost, and because they are in federal law, people can’t opt out.

Analysts at the Congressional Budget Office estimate the average policy for those who get health insurance through the workplace will cost $20,000 a year for a family of four by the year 2016. Millions of Americans who buy insurance on their own will pay at least $2,100 a year more for their policies than if the law had not passed, CBO says.

Obtaining health insurance will not be optional since everyone will be required to have coverage or pay a fine.

Former CBO Director Douglas Holtz-Eakin estimates as many as 35 million more people will flood to the subsidized exchanges for health insurance than Congress expected, adding $1 trillion to the $2.6 trillion cost to taxpayers.

One of the tools companies have found valuable in helping them offer affordable coverage, Health Savings Accounts, are at risk of being strangled by obscure and complex regulations issued by the Department of Health and Human Services.

The lower-cost HSAs would not be able to comply with strict new rules dictating how premium dollars must be allocated. The chief Medicare actuary has said health spending will actually increase thanks to the Affordable Care Act by at least $311 billion over the decade.

But supporters of the law are pointing to figures released in December showing that per capita spending in Medicare increased only 2 percent in 2011, half the normal rise. The actuaries, however, attribute the slowing primarily to lower utilization of medical services by seniors, not to provisions in the new law.

With 10,000 Baby Boomers aging into Medicare every day, spending will soon bankrupt Medicare and the federal government unless the program is modernized.

One of the reasons the business community supported passage of the law was because of promises it would finally get health costs under control. The experience in Massachusetts, which passed legislation in 2006 similar to the national law, shows that costs are continuing to soar, with Massachusetts still facing the highest health costs in the nation.

The rest of the country faces the same threat under the new law. We needed health reform, but the Affordable Care Act tried to do too much too fast and it is backfiring in its goals. It’s time to head back to the negotiating table and get this right to save consumers, businesses and taxpayers from the law’s calamitous costs.

Grace-Marie Turner is president and founder of the Galen Institute, which is funded in part by the pharmaceutical and medical industries. Readers may email her at GraceMariegalen.org.